that the fixed manufacturing overhead costs remain at $600,000 but the company decides to manufacture 120,000 units (even though sales are expected to be only 100,000 units). In this situation, the fixed manufacturing...
that the fixed manufacturing overhead costs remain at $600,000 but the company decides to manufacture 120,000 units (even though sales are expected to be only 100,000 units). In this situation, the fixed manufacturing...
of a plant-wide rate will be more equitable than the use of departmental rates for allocating manufacturing overhead. True Wrong. False Right! 13. Manufacturing overhead costs are also known as indirect manufacturing...
The rate that will discount all cash flows to a net present value of zero.
A term used in evaluating business investments. It represents the targeted rate that a company needs to earn. It is also referred to as the discount rate, because this rate is used to discount the future cash flows to...
The interest rate specified or stated in a note payable or in a bond payable. Often this rate is fixed and will not change during the life of the note or bond.
The interest rate stated on a bond. This is also referred to as the face interest rate, nominal interest rate, and coupon rate.
The stated interest rate appearing on the face of the bond. Also referred to as the nominal rate or the stated interest rate.
A loan in which the interest rate does not change over the life of the loan.
A percentage of an hourly wage rate (or salary) that represents the employer’s additional costs of employee benefits such as paid vacation days, paid sick days, insurance (health, dental, life, worker...
See direct labor rate variance.
What is hurdle rate? Definition of Hurdle Rate In capital budgeting, the term hurdle rate is the minimum rate that a company wants to earn when investing in a project. Therefore, the hurdle rate is also referred to as...
See yield to maturity.
See hurdle rate.
A target rate. For example, companies may decide to invest only in projects that generate an internal rate of return that is in excess of 12%. The 12% figure becomes the hurdle rate.
The amount by which total costs will change when an activity is increased by one unit. In the equation of the line, y = a + bx, the variable cost rate is represented by ‘b’ and the units of activity are...
Also referred to as the current interest rate, the yield-to-maturity, and the effective interest rate. The market interest rate is always changing whereas the stated interest rate does not change.
See contractual interest rate.
What is burn rate? In business, burn rate is usually the monthly amount of cash spent in the early years of a start-up business. Burn rate is an important metric since the new business must spend time and money...
An interest rate that is not explicitly stated. For example, instead of paying $100 cash a person is allowed to pay $9 per month for 12 months. The interest rate is not stated, but the implicit rate can be determined by...
In accounting this is the rate used to discount future cash flows in order to determine their present value.
An indicator of profitability that is measured by dividing the accounting net income by the amount invested.
and assigns fixed manufacturing overhead to its only product based on standard direct labor hours (DLHs). During the past year, the company experienced the following: 27. The standard rate for applying the fixed...
opportunity overhead period prime product standard sunk variable 37. Realistic, predetermined costs for direct materials, direct labor, and factory overhead describes __________ costs. Select... conversion drivers fixed...
Manufacturing costs other than direct materials and direct labor. To learn more about manufacturing overhead, see our Manufacturing Overhead Outline.
Usually refers to manufacturing overhead costs such as factory supplies, factory depreciation, indirect factory labor, etc. To learn more, see Explanation of Manufacturing Overhead.
Also referred to as manufacturing overhead, indirect manufacturing costs, factory burden, and manufacturing support costs. To learn more, see Explanation of Manufacturing Overhead.
Nonmanufacturing Overhead For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided. If...
See Explanation of Standard Costing.
The situation where a company has assigned less manufacturing overhead than the amount actually incurred.
To learn more, see our Nonmanufacturing Overhead Outline.
The indirect manufacturing costs actually incurred during an accounting period.
Assigning more manufacturing overhead to production than the amount that was actually incurred.
Our Explanation of Standard Costing uses an easy-to-relate to example for illustrating a manufacturer's standard costs and variances. Also provided is a chart which indicates each variance, what it tells you, and where...
is fixed only within a reasonable or relevant range of activity.) Many manufacturing overhead costs are fixed and the amounts occur in large increments. Additional examples include depreciation on a company-owned...
A predetermined dollar amount that a pound of material or an hour of labor should cost during an accounting period.
A predetermined dollar amount that one unit of a finished product should cost during an accounting period.
What is a fringe benefit rate? Definition of Fringe Benefit Rate A fringe benefit rate is a percentage that results from dividing the cost of an employee’s fringe benefits by the wages paid to the employee for the...
A variance arising in a standard costing system that indicates the difference between the standard cost of direct labor for the good output (standard hours times standard rate) and the standard cost of the actual hours...
What is an implicit interest rate? Definition of Implicit Interest Rate An implicit interest rate is one that is not stated explicitly. Example of Implicit Interest Rate Assume that I lend you $4,623 and you agree to...
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